I have done a ton of dropshipping over the years and don't think the $3 fee is out of line. Basically they are paying someone to package/process your order. If it's a $1 item, then yeah it's too much, but if it's a decently priced item with a good return then it's not bad.
Depending on your profit margin either absorb the fee or pass it on to your customer.
Rod
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